Last week we looked at the four avenues all businesses have to increase their turnover and profits. This week we are breaking this down further and taking a closer look at the 2nd avenue, “increasing the price you charge for your services or goods”.
Before simply increasing your prices by say 10% you should do some research and know what your competitors are currently charging their and your customers and what the “market price” for your goods or services is. Undertaking this research is not as easy as it seems, or simply phoning around and going online to check out competitors prices.
Who are your competitors?
Simple enough question but let’s look at your local pub. Obviously other pubs in the area are competitors to your pub but your competitors do not stop here. What about other styles of restaurants such as Thai or Mexican, as all restaurants compete for that patron. What about bottle shops competing for the alcohol space against your pub. We can also look a little broader afield and think about your pub competing in the “discretionary spending” space where customers have a certain amount of discretionary income or money to spend each week which can be used for eating out, movies, short trips and so on. After having done this research you may simply find that you have been undervaluing your services or goods and are charging less than what other competitors are. Now simply increase your price to the market or slightly below making sure you are providing the same or better service, this will equate to better “value” which is what we are all looking for.
What if this is not the case and you are charging the same market prices, then how can you increase prices to your customers? Do you ever talk to your customers or clients and ask them what they are looking for as you may not be aware you are missing something that could make your clients life easier, better or save them time. Think about and investigate small things you can provide that do not cost you much or take too much of your time up, but will be a significant benefit to your customers or clients. Recently we replaced our office photocopier ( one of those very large mass printing ones ) and the group that ultimately go the sale spent time finding out about our office printing use as well as processes relating to scanning and emailing. They then offered us a small trade in on our very old run down photocopier and took it away for us for free. This saved us a significant amount of time, money and hassle in arranging someone else to remove the old machine for us, but would be of very little cost to the company providing us with the new machine and in fact they would likely use the old machine for parts and make money from it.
This is just one simple strategy you can engage immediately to look to add value to your customers and provide room to increase prices. Think about “what benefit does my client get” when looking to add value to your services or goods.
Next week we will be discussing Blue Ocean Strategy as this opens up your market allowing you to increase your prices and is a longer term strategic and competitive approach to super profits BUT requires more time and effort to research and implement.
For any questions or if you would like to work with us, please get in contact.